Recent Case Studies

2010 Construction Defect Claim

Amherst completed the management of a multi-million dollar construction defect project involving a 121-unit luxury apartment complex located in Hollywood, California. This property borders and overlooks the Wilshire Golf Course. Amherst was retained by an International Real State Partnership in December 2005 to determine the cause of several defects manifesting in the building shortly after the completion of its construction.

Amherst's role as a consultant, was to determine the cause of the defects and to develop appropriate repairs while limiting the effect on the building's current occupants. As construction manager, Amherst was to oversee all repairs, and as lead experts for the plaintiff, aid in the recovery efforts. There were over 30 defendants involved in the litigation. Amherst went through the first round of mediations in December 2007 after Amherst issued the Preliminary Defect Statement. On May 15 2008, Amherst issued the Final Defect Statement and mediations resumed in August 2008.

The first eight months were spent conducting destructive testing to determine the extent of the construction defects and negotiating with the original contractor to attempt to get them to correct their defective work. In November 2006, corrective repairs began with a different contractor. Work included removal and replacement of a podium deck topping slab and pool, complete removal and replacement of the building's exterior stucco, complete removal and replacement of the roof and exterior balconies, and removal and replacement of all exterior windows. Work continued through July of 2009. The building maintained an occupancy rate in the 95% range during the repairs.

In 2010, Amherst was a key component in recovering $19,800,000.00 for construction and related costs from the 30 defendants in a court ordered mediation.

2010 Fire Reconstruction Project

Overview

The Insured brought in a fire restoration contractor they had used before, they trusted, and with which they had a master contract. This contractor was operating on a T&M (Time and Materials) contract and had the project loaded with people, equipment, subcontractors and materials. If the Insured had insisted on using this contractor for all the work, Amherst's job would have been only to audit an impossible situation for cost control. Amherst projected that if this had been the case, final cost for the reconstruction would have been $8,000,000 to $9,000,000. Once hard bids were in place for the reconstruction the cost was $5,500,000. Amherst credits this success in cost containment to the following:

Auditing of Emergency Services

Amherst provided construction oversight and cost auditing of the emergency services T&M billing, substantially reducing ongoing and excessive billing by the original contractor in the Phase l part of the project. In addition to controlling ongoing costs through management of scope, Amherst was able to reduce the overall billing by $100,000 for excessive and duplicative charges.

Asbestos Abatement and Mold Remediation

Early in the emergency phase of the project, Amherst recognized the excessive and uncontrolled nature of the asbestos abatement portion of the work being performed by a subcontractor to the original contractor. Amherst was successful in bringing in a credentialed, reasonable and fair Certified Industrial Hygienist that quickly turned the project around, while not compromising the safety of the project to the onsite personnel and the public.

During the course of the remediation phase, Amherst was able to convince the Insured that moving from an uncontrolled T&M billing to a bid process would substantially save money and time on the project. Contractors were solicited and the low bid contractor performed to all expectations.

Amherst was able to convince the Insured to switch from paying the emergency services contractor directly, to include a 20% markup, to paying for these services directly by the Insured. Amherst convinced the Insured that the emergency services contractor was merely acting as a broker and provided no added value to the project. Based on a review of performance of the work under a hard bid compared to the performance of the work on a T&M basis, this process saved at least 30% over the remaining abatement services and the later mold abatement services.

Implementing Direct Insured Contracting

One of the most significant cost saving factors in this project was Amherst assisting in the "weaning" of the Insured off of their emergency services contractor. After successfully managing the last half of the abatement with little or no problems, the Insured began to take a more active roll in the project and paid for each of the construction phases directly. This process alone showed substantial savings through elimination of the general contractor markup.

As stated previously, the original emergency services contractor billed the project on a T&M basis with a rate sheet that had markups in excess of 400%. Amherst was able to demonstrate the excessive nature of this type of billing to the Insured early on in the project saving both the Insured and the Insurers a protracted fight over costs at the end of the project.

Converting the Project from T&M to Controlled Bid Price Structure

As with the early-on asbestos abatement, Amherst convinced the Insured that moving to a controlled bid process would save time and money. Amherst assisted the Insured in developing a comprehensive bid package for each of the remaining phases of the reconstruction. The Insured placed them out to bid and received comprehensive scopes and pricing. In doing so, this process successfully removed several of the unknowns limiting the potential for change orders and provided the lowest cost in an already competitive market. This process alone saved over $950,000 in known costs during the remediation and Phases 1 through 3, over the emergency services contractor that was originally slated to do all of the reconstruction work.

Amherst was influential in working with the Insured's Architect on negotiating reduced code upgrade requirements on this project. At one point in this project, code upgrades were projected to have cost as much as $1,000,000. Through agency negotiations (which Amherst attended), these upgrades were reduced to the range of $200,000.

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